Joe Schick
Director of Postal Affairs

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This Is News?

Tuesday 7/31/2012

The big news of the day is that the USPS will be defaulting on payments due the U.S. Treasury on August 1, 2012, and September 30, 2012 to pre-fund retiree health benefits.

This is news?

The August 1 payment was actually due on September 30, 2011. The USPS has been saying for more than a year that it would not be able to make these payments because of its financial situation. Congress at the time decided to kick the can down the road instead of correcting the problem by crafting legislation that would reduce the burden (legislatively-mandating that the USPS pre-fund retiree healthcare to the tune of roughly $5.5 billion per year) on the Postal Service while still ensuring that there is appropriate funding for retirees. That can be done by reducing the annual payment and extending the period of time the payments will be made, from the current 10 years to 30 or 40 years. This is easily possible, since it would not result in any shortfall to the fund now or in the future.

As the USPS stated in a press release ... This action will have no material effect on the operations of the Postal Service. We will fully fund our operations, including our obligation to provide universal postal services to the American people. We will continue to deliver the mail, pay our employees and suppliers and meet our other financial obligations. Postal Service retirees and employees will also continue to receive their health benefits. Our customers can be confident in the continued regular operations of the Postal Service.

Why hasn't Congress taken the necessary action? I think everyone should ask his or her Representatives. You see, the Senate actually passed a Postal Reform Bill in April (S.1789 - The 21st Century Postal Service Act of 2012). While it isn't the be-all and end-all of postal reform legislation, Quad and others did support it with the hope that movement of legislation would lead to something substantive later in Conference Committee. And there is a bill (H.R.2309 - The Postal Reform Act of 2011) that has been passed out of Committee but still has not made its way to the House floor. As with the Senate bill, it isn't perfect but we do support it. Again, the message to Congress was and is "get something done to move the process along, and then put together better legislation in Conference."

In late June, we were lead to believe that the House would act on the bill shortly after the July 4 recess. Supposedly, the votes were there to get it passed. I can only guess what happened next. But it appears that visions of re-election began to dance in the heads of members of the House, causing them to decide that any legislative vote at this time could result in someone not liking them. So once again another can is abused as it rolls down the road. The expectation is for something to happen after the November elections during the lame duck session of Congress. Of course, the schedule during that time is filling up quickly with other important issues (tax cuts, defense spending, etc.) which could push postal reform to the backburner once again.

Understand that getting the legislative changes made is not the magic bullet that fixes all that's wrong with the Postal Service as some would have you believe. It's a step in the process, and will facilitate the major changes that are needed to right-size and lower costs.

While Congress plays politics, the mailing industry marches toward 2013 with the same uncertainty that greeted us in 2012. While we have some assurance that there will be action taken to help the Postal Service regroup, right-size and get back on solid financial footing, there is no way to tell specifically how that is going to get done or when. All we can do is continue to communicate with our Congressional reps in the House and Senate, helping them to understand the importance of the USPS to the mailing and printing industry and how uncertainty in its future impacts us and our clients.